Strategic Analysis of the TROSA Grocery Store in the Context of Durham’s Food Deserts

Abstract:

This research was commissioned by Triangle Residential Options for Substance Abusers (TROSA), a non-profit based in Durham, North Carolina that operates several small businesses as part of their integrated approach to supporting rehabilitation through vocational training, counseling, and education in a therapeutic community setting. In 2010, TROSA opened a grocery store in Northeast Central Durham, in response to a perceived need on the part of community leaders for increased access to fresh foods within the neighborhood. The primary objective of the original research was to examine the strategic value of the TROSA Grocery Store within TROSA’s overall mission. The profitability and strategic analysis conducted for TROSA contain confidential and proprietary data concerning costs, sales, and organizational priorities. As such, the original problem statement, strategic analysis and recommendations could not be included in this modified version of the thesis. Northeast Central Durham includes several neighborhoods that can be classified as “food deserts”, defined as areas with limited access to fresh food retail. Research indicates that living in a food desert may increase incidence of nutrition related diseases such as cardiovascular disease, diabetes, and hypertension. Food deserts are caused by private business decisions in reaction to market forces, specifically the economies of scale experienced in the grocery industry. The lack of grocery stores in low-income neighborhoods should not be interpreted as a lack of demand. In fact, there is latent demand for fresh foods in low-income neighborhoods, provided that these foods can be sold at a competitive price point. As such, public-private partnerships to reduce the costs of operating a fresh food retail business in a low-income neighborhood may be able to sufficiently incentivize grocery stores to locate in these neighborhoods. The opening of new stores in low-income neighborhoods will provide the additional benefit of creating new jobs and expanding the tax base. The following recommendations are not targeted to a single organization, but provide a high-level view of the types of programs and partnerships that would encourage increased retail of fresh foods in low-income neighborhoods in Durham. 1) Make available economic development funds specifically for fresh food retailers in underserved areas. 2) Develop a “patient capital” financing program to provide grants and loans to supermarkets, small grocery stores, and other fresh food retailers to enhance healthy food access in underserved areas. 3) Work with large grocery stores in the area to explore the financial viability of opening “satellite” stores, to take advantage of economies of scale.